1
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM 10-QSB
(Mark One)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1996
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ________________ TO
________________.
Commission file number 0-22170
EPOCH PHARMACEUTICALS, INC.
(exact name of small business issuer as specified in its charter)
Delaware 91-1311592
(State or other jurisdiction (I.R.S. Employer Identification Number)
of incorporation or organization)
1725 220th Street, S.E., No. 104, Bothell, Washington 98021
(Address of principal executive offices)
(206) 485-8566
(Issuer's telephone number)
NOT APPLICABLE
(Former name, former address and former fiscal year,
if changed since last report)
Check whether the issuer (1) filed all reports to be filed by Section 13 or
15(d) of the Exchange Act during the past 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days.
YES X NO
State the number of shares outstanding of each of the issuer's classes of common
equity as of the latest practicable date.
Class Outstanding at November 4, 1996
Common Stock, $.01 par value 14,723,856
Page 1 of 44 Pages
Exhibit Index on Page 16
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EPOCH PHARMACEUTICALS, INC.
INDEX TO FORM 10-QSB
PART I. FINANCIAL INFORMATION Page Number
Item 1. Financial Statements
Balance Sheets as of December 31, 1995
and September 30, 1996 (unaudited)...................................................... 3
Statements of Operations (unaudited) for the three
months and six months ended September 30, 1995 and 1996................................. 4
Statements of Cash Flows (unaudited) for the nine months ended
September 30, 1995 and 1996............................................................. 5
Notes to Financial Statements.......................................................... 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations........................................................ 8
PART II. OTHER INFORMATION
Item 1. Legal Proceedings........................................................................... 11
Item 4. Submission of Matters To a Vote of Security Holders......................................... 13
Item 6. Exhibits and Reports on Form 8-K............................................................ 14
SIGNATURES ............................................................................................... 15
EXHIBIT INDEX............................................................................................. 16
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EPOCH PHARMACEUTICALS, INC.
BALANCE SHEETS
DECEMBER 31, SEPTEMBER 30, 1996
1995 (UNAUDITED)
---- -----------
ASSETS
Current assets:
Cash and cash equivalents.......................................... $ 3,739,144 $ 4,907,165
Receivables........................................................ 147,975 37,900
Prepaid expenses................................................... 52,968 58,767
------------- ------------
Total current assets........................................ 3,940,087 5,003,832
Equipment and leasehold improvements, net............................ 350,045 253,403
Other assets......................................................... 39,363 21,150
------------ ------------
Total assets................................................ $ 4,329,495 $ 5,278,385
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable...................................................... $ 1,217,994 $ 13,783
Accounts payable................................................... 341,899 209,512
Accrued liabilities................................................ 361,664 237,916
Accrued litigation costs........................................... 250,000 --
------------ ------------
Total current liabilities................................... 2,171,557 461,211
------------ ------------
Stockholders' equity:
Preferred stock, par value $.01; authorized 10,000,000 shares;
no shares issued and outstanding............................... -- --
Common stock, par value $.01; authorized 30,000,000 shares,
issued and outstanding 7,023,400 and 14,266,713 shares......... 70,234 142,667
Additional paid-in capital......................................... 46,860,059 52,097,120
Deferred compensation.............................................. (99,512) (54,870)
Accumulated deficit................................................ (44,672,843) (47,367,743)
------------- ------------
Total stockholders' equity.................................. 2,157,938 4,817,174
------------ ------------
Total liabilities and stockholders' equity.................. $ 4,329,495 $ 5,278,385
============ ============
See accompanying notes to financial statements.
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EPOCH PHARMACEUTICALS, INC.
STATEMENTS OF OPERATIONS
(UNAUDITED)
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
----------------------------- -------------------------------
1995 1996 1995 1996
----------- -------------- ------------- --------------
Operating expenses:
Research and development..................... $ 383,653 $ 498,798 $ 840,036 $ 1,511,262
General and administrative................... 378,626 381,284 1,260,323 910,363
----------- -------------- ------------- --------------
Operating loss .......................... (762,279) (880,082) (2,100,359) (2,421,625)
Other income (expense):
Interest income.............................. 762 64,358 10,398 126,546
Interest and financing expense............... (277,964) (2,536) (385,183) (181,787)
Other income................................. 7,400 6,200 9,800 15,601
----------- -------------- ------------- --------------
Loss from continuing operations.......... (1,032,081) (812,060) (2,465,344) (2,461,265)
Income (loss) from
discontinued operations................ 192,484 (160,735) 733,783 (233,635)
----------- -------------- ------------- --------------
Net loss................................. $ (839,597) $ (972,795) $ (1,731,561) $ (2,694,900)
=========== ============== ============= ==============
Loss per share from
continuing operations........................... $ (0.15) $ (0.06) $ (0.35) $ (0.26)
Income (loss) per share from
discontinued operations.......................... $ 0.03 $ (0.01) $ 0.10 $ (0.02)
----------- -------------- ------------- --------------
Net loss per share............................... $ (0.12) $ (0.07) $ (0.25) $ (0.28)
=========== ============== ============= ==============
Weighted average common shares
outstanding during the period.................. 7,019,993 14,266,713 7,014,394 9,700,692
See accompanying notes to financial statements.
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EPOCH PHARMACEUTICALS, INC.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
NINE MONTHS ENDED
SEPTEMBER 30,
1995 1996
------------ -----------
Cash flows from operating activities:
Net loss............................................................ $(1,731,561) $(2,694,900)
Adjustments to reconcile net loss to net cash
used in operating activities:
Continuing operations:
Depreciation and amortization................................... 192,985 148,871
Amortization of discount on notes payable....................... 219,685 122,326
Other........................................................... 29,315 --
Changes in operating assets and liabilities:
Accounts receivable............................................. (5,000) 1,627
Other assets.................................................... 20,355 12,414
Accounts payable and accrued liabilities........................ (613,341) (447,990)
Other current liabilities....................................... -- (625)
Discontinued operations:
Changes in current assets and current liabilities............... 553,922 95,577
Decrease in net noncurrent assets
in excess of noncurrent liabilities........................ 63,762 --
----------- ------------
Net cash used in operating activities............................. (1,269,878) (2,762,700)
------------ ------------
Cash used in investing activities - acquisition of equipment
and leasehold improvements........................................ (4,472) (52,229)
------------ ------------
Cash flows from financing activities:
Proceeds from notes payable....................................... 2,250,000 --
Principal payments on notes payable............................... (158,251) (1,326,537)
Principal payments on capital leases.............................. (13,454) --
Proceeds from sale of common stock................................ -- 4,632,500
Exercise of warrants and stock options............................ 4,403 676,994
----------- ------------
Net cash provided by financing activities......................... 2,082,698 3,982,957
----------- ------------
Net increase in cash and cash equivalents......................... 808,348 1,168,021
Cash and cash equivalents at beginning of period....................... 9,984 3,739,144
----------- ------------
Cash and cash equivalents at end of period............................. $ 818,332 $ 4,907,165
=========== ============
Supplemental disclosure of cash flow information-
cash payments made during the period for interest.............. $ 16,502 $ 80,665
=========== ============
Non-cash financing activities:
Debt discount incurred on repricing of warrants................... $ 480,000 $ --
=========== ============
See accompanying notes to financial statements.
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EPOCH PHARMACEUTICALS, INC.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1996
(UNAUDITED)
(1) BASIS OF PRESENTATION
Epoch Pharmaceuticals, Inc. ("Epoch" or "the Company"), formerly MicroProbe
Corporation, was organized to develop, manufacture and market therapeutic and
diagnostic products utilizing oligonucleotide technology. In November 1995, the
Company sold its diagnostics assets to Becton, Dickinson and Company (see note
2). The Company's continuing activities are focused on the development of
therapeutic technologies and products.
The unaudited financial statements have been prepared in accordance with
generally accepted accounting principles for interim financial information and
with the instructions to Form 10-QSB. Accordingly, they do not include all of
the information and footnotes required to be presented for complete financial
statements. The accompanying financial statements include all adjustments
(consisting only of normal recurring accruals) which are, in the opinion of
management, necessary for a fair presentation of the results for the interim
periods presented. Certain 1995 balances have been reclassified to conform with
the 1996 presentation.
The financial statements and related disclosures have been prepared with the
presumption that users of the interim financial information have read or have
access to the audited financial statements for the preceding fiscal year.
Accordingly, these financial statements should be read in conjunction with the
audited financial statements and the related notes thereto included in the
Company's Annual Report on Form 10-KSB as filed with the Securities and Exchange
Commission.
The Company has experienced significant quarterly fluctuations in operating
results and it expects that these fluctuations in expenses and net losses will
continue.
(2) SALE OF DIAGNOSTICS ASSETS
In November 1995, the Company sold the Company's assets and technology
associated with its Diagnostics Division (the "Assets") to Becton, Dickinson and
Company, a New Jersey corporation, through its Becton Dickinson Diagnostic
Instrument Systems Division (collectively, "Becton"). The Assets related to the
Company's development, marketing and sale of diagnostic products which involve
the use of nucleic acid probes to detect and identify microorganisms in
biological samples under the names "Affirm(R) VP," "Affirm(R) VPIII," "Affirm(R)
DP," "Hybriquick(R)" and "Isoquick(R)". The Assets included: tangible personal
property, interests in certain contracts and other instruments, rights in
permits and licenses, raw materials and inventory, technology, trade secrets,
patents, other intellectual property (including the name "MicroProbe"), rights
in customer lists, records and data, computer software programs, goodwill and
causes of action held by the Company against third parties. The aggregate
purchase price paid by Becton for the Assets and for the Company's covenant not
to compete with Becton for a period of five years was $8,510,000. The Purchase
Price is subject to an upward adjustment of $1,500,000 contingent upon Procter &
Gamble entering into a supply agreement with Becton by November 2002, for the
dental diagnostic products, which were
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transferred by the Company to Becton, and Procter & Gamble obtaining all
clearances from the United States Food and Drug Administration necessary for the
commercial sale of such products in the U.S. The Company does not anticipate
receiving these funds.
(3) PRIVATE PLACEMENT
In June 1996, the Company successfully completed a private offering of Units,
each Unit consisting of one share of the Company's Common Stock and one warrant
to purchase 0.5 shares of the Company's Common Stock. The Company sold a total
of 5 million Units, for an aggregate purchase price of $5 million to
institutional and accredited individual investors.
The term of the warrants is five (5) years, and they are exercisable at $2.50
per share (or $1.25 per 0.5 shares). Each warrant is redeemable by the Company
at any time after eighteen months from the date of issuance at $0.05 per
warrant, provided that the closing trading price per share of Common Stock is at
least $3.75 for twenty consecutive trading days.
In connection with the private placement, pursuant to an agreement with its
financial advisor, David Blech, a significant shareholder of the Company, the
Company paid fees of $350,000 to Mr. Blech. In addition, the Company cancelled
fifty percent (50%) of the obligations of Mr. Blech to the Company arising in
connection with the transactions involving Ribonetics GmbH, including the "put"
rights contained in an agreement dated December 1, 1993 between the Company and
Mr. Blech. The aggregate amount cancelled was $1,635,588. The balance is
accruing interest at the minimum applicable federal rate. As the obligation had
been fully reserved, and the remaining balance is fully reserved, neither the
cancellation nor the remaining obligation is reflected on the Company's balance
sheet. The Company also issued to Mr. Blech five year warrants to purchase
500,000 shares of Common Stock at $1.00 per share. The warrants are not
exercisable for one year and are held in escrow by the Company until the balance
of Mr. Blech's obligation to the Company is satisfied.
In addition to completion of the private placement, major shareholders of the
Company elected to exercise previously existing warrants to purchase 2,200,000
shares of the Company's Common Stock at $0.30 per share generating an additional
$660,000 of cash to the Company.
(4) VIRGINIA MASON AND EPOCH PHARMACEUTICALS RESEARCH GRANT
In October 1996, The National Institute of Arthritis and Musculoskeletal and
Skin Disease, of the National Institutes of Health, awarded a four-year contract
to Virginia Mason Research Center, and the Company as subcontractor, to develop
and test a compound designed to inactivate a gene which causes rheumatoid
arthritis. The federal research award is for $1.2 million of which Epoch will
receive $584,000 over the four year period.
Virginia Mason, with its expertise in arthritis, will partner with Epoch, with
its expertise in gene- modification, to develop novel therapeutic compounds for
the treatment of arthritis. Such compounds are expected to search the DNA
structure to locate and attach to the affected gene. Researchers then hope to
turn off the genetic element which causes the patient's immune system to attack
cells in patients' joints, resulting in rheumatoid arthritis.
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(5) SALE OF TECHNOLOGY
In September 1996, the Company signed a letter of intent with Saigene
Corporation, (Saigene), whereby Epoch would transfer its remaining diagnostic
technologies to Saigene for $1,100,000.
(6) SALE OF COMMON STOCK AND STRATEGIC ALLIANCE WITH VIMRX
In October 1996, the Company and VIMRx Pharmaceuticals, Inc., Wilmington,
Delaware ("VIMRx") announced the establishment of an alliance between the two
companies to attempt to exploit the synergies between their respective
technologies and markets, and a settlement of the outstanding dispute between
Epoch and VIMRx's German subsidiary, formerly known as Ribonetics. VIMRx
invested $800,000 in exchange for Epoch common stock at $1.75 per share. In
addition, VIMRx received 450,000 warrants to purchase common stock exercisable
at $2.00 and 450,000 warrants to purchase common stock exercisable at $3.00
which expire in October 1997 and 1998 respectively.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
At September 30, 1996, the Company had cash and cash equivalents of $4,907,000.
In addition, the Company received $800,000 from VIMRx in October 1996 as
described in Note (6) of the Notes to the Financial Statements. The Company
anticipates the combined funds of $5,707,000 will provide sufficient working
capital to operate for approximately fifteen months. The Company's continuing
operations are research and development, which will not generate cash in the
near term to fund future operations.
In June 1996, the Company successfully completed a private placement (the
"Private Placement") of Units; each Unit consisting of one share of the
Company's Common Stock and one warrant to purchase 0.5 shares of the Company's
Common Stock as described in Note (3) of the Notes to the Financial Statements.
Also in June 1996, the Company announced that it intends to exchange for every
two warrants which were issued in conjunction with the Company's public offering
in September 1993 at $6.50 per share, one new warrant to purchase one share of
the Company's Common Stock with a term of five years that is exercisable at
$2.50 per share. Each warrant will be redeemable by the Company at any time
after eighteen months from the date that they are issued at $0.05 per warrant,
provided that the closing trading price per share of Common Stock is at least
$3.75 for twenty (20) consecutive trading days.
In September 1996, the Company signed a letter of intent with Saigene
Corporation ("Saigene"), whereby Epoch would sell its diagnostic technologies to
Saigene for $1,100,000.
In October 1996, The National Institute of Arthritis and Musculoskeletal and
Skin Disease, of the National Institutes of Health, awarded a four-year contract
to Virginia Mason Research Center, and Epoch as subcontractor, to develop and
test a compound designed to inactivate a gene which causes
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rheumatoid arthritis. The federal research award is for $1.2 million of which
Epoch will receive $584,000 over the four year period.
Virginia Mason, with its expertise in arthritis, will partner with Epoch, with
its expertise in gene- modification, to develop novel therapeutic compounds for
the treatment of arthritis. Such compounds are expected to search the DNA
structure to locate and attach to the affected gene. Researchers then hope to
turn off the genetic element which causes the patient's immune system to attack
cells in patients' joints, resulting in rheumatoid arthritis.
Also in October 1996, the Company and VIMRx announced the establishment of an
alliance between the two companies to attempt to exploit the synergies between
their respective technologies and markets, and a settlement of the outstanding
dispute between Epoch and VIMRx's German subsidiary, formerly known as
Ribonetics. VIMRx invested $800,000 in exchange for Epoch common stock at $1.75
per share. In addition, VIMRx received 450,000 warrants to purchase common stock
exercisable at $2.00 and 450,000 warrants to purchase common stock exercisable
at $3.00 which expire in October 1997 and 1998, respectively.
Since inception, the Company has financed its operations primarily through the
sales of its equity securities. In addition, the Company received $8,510,000
from the sale of its Diagnostics Division as described in Note (2) of the Notes
to Financial Statements. To continue operations, the Company will be required to
sell additional equity securities, borrow funds, or obtain additional financing
through licensing, joint venture, or other collaborative arrangements. The
Company is pursuing such financing arrangements but has no commitments for such
financing and there can be no assurance that such financing will be available on
satisfactory terms, if at all.
This Quarterly Report on Form 10-QSB contains certain forward-looking statements
that are based on current expectations. In light of the important factors that
can materially affect results, including those set forth below and elsewhere in
this Quarterly Report on Form 10-QSB, the inclusion of forward-looking
information herein should not be regarded as a representation by the Company or
any other person that the objectives or plans of the Company will be achieved.
The Company may encounter competitive, technological, financial and business
challenges making it more difficult than expected to continue to develop and
market therapeutic technologies and products; the market may not accept the
Company's therapeutic products; the Company may be unable to retain existing key
management personnel; and there may be other material adverse changes in the
Company's operations or business. Certain important factors affecting the
forward-looking statements made herein include, but are not limited to (i) the
successful development of viable therapeutic technologies and products, (ii)
accurately forecasting capital expenditures, and (iii) obtaining new sources of
external financing. Assumptions relating to budgeting, marketing, product
development and other management decisions are subjective in many respects and
thus susceptible to interpretations and periodic revisions based on actual
experience and business developments, the impact of which may cause the Company
to alter its marketing, capital expenditure or other budgets, which may in turn
affect the Company's financial position and results of operations.
Future operating results may be impacted by a number of factors that could cause
actual results to differ materially from those stated herein, which reflect
management's current expectations.
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RESULTS OF OPERATIONS
The following discussion of results of operations reflects the Company's
Diagnostics Division as discontinued operations for the three and nine month
periods ended September 30, 1995 and 1996.
Research and development expenses for the three months ended September 30, 1996
increased $115,000 over the same period in the prior year. This increase is
reflective of the increased research activity which is being funded with
proceeds from the sale of the Assets of the Company's Diagnostics Division and
from the Private Placement.
Research and development expenses for the nine month period ended September 30,
1996 increased $671,000 over the same period in the prior year. This increase in
the year to date expense is also reflective of the increased research activity
currently being funded. Additionally, for the nine months ended September 30,
1995, research and development expense was reduced by $404,000 for a research
contract which had been accrued but was subsequently cancelled. Additional
increases in expenditures for research and development throughout 1996 are
anticipated as the Company devotes additional resources to these efforts.
General and administrative expenses in the three month periods ended September
30, 1995 and September 30, 1996 are generally comparable. In July 1996 the In Re
Blech Securities Litigation suit (see Part II, Item 1, Legal Proceedings) was
dismissed. Accordingly, $250,000 of estimated costs which had been accrued for
this matter was reversed as a reduction of expenses in the nine month period
ended September 30, 1996.
Interest income in the three and nine month periods ended September 30, 1996
increased compared with the respective periods in the prior year due to higher
investable funds. Interest expense in the three and nine month periods ended
September 30, 1996 is significantly reduced from the comparable periods of 1995
as the majority of debt was repaid in the second quarter of 1996 with funds
received in the Private Placement as described in Note (3) of the Notes to the
Financial Statements.
In addition to the interest on the principle amounts of the loans, interest
expense in the nine months ended September 30, 1996 includes $122,000 of
amortization of debt discount associated with bridge refinancing. The price
adjustment was credited to additional paid-in capital and the debt discount was
amortized over the term of the notes. At March 31, 1996, the discount had been
fully amortized.
LIQUIDITY AND CAPITAL RESOURCES
The net cash increase of $1,168,000 from December 31, 1995 to September 30, 1996
was primarily the result of the receipt of net proceeds of $4,633,000 from the
Private Placement, and the receipt of $660,000 from the exercise of warrants to
purchase the Company's common stock by major shareholders in June 1996. These
receipts were offset by the repayment of notes payable plus interest in the
amount of $1,396,000, and cash used for operations.
In October 1996, the Company received $800,000 of additional cash in conjunction
with the establishment of an alliance with VIMRx. See Note (6) of the Notes to
the Financial Statements.
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The Company's primary future needs for capital are for continued research and
development. The Company's working capital requirements may vary depending upon
numerous factors, including the progress of the Company's research and
development, competitive and technological advances and the FDA regulatory
process.
The Company will require additional funds to continue its operations and, over
the longer term, will require substantial additional funds to maintain and
expand its research and development activities and to ultimately commercialize,
with or without the assistance of corporate partners, any of its proposed
products. The Company will seek collaborative or other arrangements with large
pharmaceutical companies, under which such companies would provide additional
capital to the Company in exchange for exclusive or non-exclusive licenses or
other rights to certain of the technologies and products the Company is
developing. However, the competition for such arrangements with major
pharmaceutical companies is intense, with a large number of biopharmaceutical
companies attempting to satisfy their funding requirements through such
arrangements. There can be no assurance that an agreement or agreements will
arise from these discussions in a timely manner, or at all, or that revenues
that may be generated thereby will offset operating expenses sufficiently to
reduce the Company's short- or long-term funding requirements. Additional equity
or debt financings may be required, and there can be no assurance that funds
will be available from such financings on favorable terms, or at all.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company was named as an additional defendant in In Re Blech Securities
Litigation, 94 Civ. 7696 (RWS), pursuant to an Amended Consolidated Class Action
Complaint (the "Amended Complaint") filed on March 28, 1995 in the United States
District Court for the Southern District of New York (the "Court"). The
plaintiffs brought this action as a purported class action on behalf of persons
who purchased, during the period from July 1, 1991 through September 21, 1994,
securities of 24 companies, including securities issued by the Company. The
Amended Complaint names as defendants 11 of the 24 issuers, including the
Company, as well as David Blech, D. Blech & Co., Mark S. Germain, Nicholas
Madonia as trustee for various trusts, Mordechai Jofen, as trustee for The
Edward Blech Trust, Chancellor Capital Management, Inc., Parag Saxena, Bear,
Stearns & Company, Inc. and Baird Patrick & Co.
The Amended Complaint sought to allege against the Company violations of
antifraud provisions of the federal securities law and common law fraud and
deceit in connection with a purported scheme to, inter alia, artificially
inflate and maintain prices of the securities issued by the 24 companies
referenced above. In that regard, the Amended Complaint purports to allege
fraudulent activities involving the foregoing securities, including without
limitation unlawful "sham" transactions and the providing of undisclosed
"incentives" to investment fund managers and others to purchase such securities.
The Amended Complaint seeks the following relief: (a) certification of this
action as a class action; (b) damages in an unspecified amount and interest; (c)
costs and expenses of this action, including reasonable fees of attorneys,
accountants and experts and other disbursements; and (d) such other and further
relief as may be proper.
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The Company moved to dismiss the Amended Complaint as to it on the grounds that
the Amended Complaint failed to plead the purported fraud with the requisite
particularity and failed to state a claim. Plaintiffs opposed the motion. By
decision dated June 6, 1996, the District Court granted the Company's motion to
dismiss for failure to plead fraud with particularity and declined to exercise
jurisdiction over the pendent common law claims asserted against the Company
under state law. The District Court granted plaintiffs leave to replead their
purported claims by July 26, 1996. The Company was not named in the repleading
and by the terms of the June 6, 1996 decision, the action was dismissed by the
District Court with respect to the Company. Although there remained other party
defendants in the action, the Company moved for entry of final judgment
dismissing the action as against the Company. Plaintiffs' opposed the motion and
oral argument of the motion occurred on October 10, 1996; the motion is pending
before the District Court.
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ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) An Annual Meeting of Stockholders was held on Wednesday,
September 25, 1996.
(b) Intentionally omitted.
(c) Purpose of Annual Stockholders Meeting:
1. Election of Directors. The following is a
tabulation of the votes for each of the four
proposed nominees for election as directors of the
Company:
Broker
For Against Abstain Non-Votes
--- ------- ------- ---------
Fred Craves, Ph.D. 12,368,418 43,372 -- --
-- --
Sanford S. Zweifach 12,368,418 43,372 -- --
Kenneth L. Melmon, M.D. 12,368,418 43,372 -- --
Gregory Sessler 12,368,418 43,372 -- --
2. Approval of Amendment of the Company's Restated
Certificate of Incorporation to Authorize
10,000,000 Shares Preferred Stock, with such
Designations, Preferences, Limitations and Relative
Rights as the Board of Directors shall determine.
The following is a tabulation of the votes:
For Against Abstain Broker Non-Votes
--- ------- ------- ----------------
7,750,286 134,560 57,822 4,469,122
3. Amendment of the Company's Restated Certificate of
Incorporation to Increase Number of Authorized
Shares of Common Stock to 30,000,000 Shares. The
following is a tabulation of the votes:
For Against Abstain Broker Non-Votes
--- ------- ------- ----------------
12,248,333 128,535 32,922 2,000
(d) Not applicable.
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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
3. Restated Certificate of Incorporation, as amended
through September 30, 1996.
10.65 Stock and Warrant Purchase Agreement dated as of
October 1, 1996, between the Company and VIMRx
Pharmaceuticals, Inc.
27 Financial Data Schedule
(b) REPORTS ON FORM 8-K
None.
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SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
EPOCH PHARMACEUTICALS, INC.
Date: November 14, 1996 By: /s/ SANFORD ZWIFACH
---------------------------------
Sanford Zweifach
President/Chief Financial Officer
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EXHIBIT INDEX
Sequentially
Exhibit Numbered
Number Description Page
3. Restated Certificate of Incorporation, as amended through
September 30, 1996. 17
10.65 Stock and Warrant Purchase Agreement dated as of
October 1, 1996, between the Company and
VIMRx Pharmaceuticals, Inc. 30
27 Financial Data Schedule
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